Sunday, July 21, 2013

Kevin O'Rourke at the Irish Economy Blog has a succinct explanation
of the findings:

The boom, not the slump, is the right time for austerity, by Kevin O’Rourke:
Alan Taylor has a
piece on Vox today that is a nice contribution to the debate on the
output effects of austerity. That debate has largely been about the
endogeneity of fiscal policy: the more you take this into account, the more
contractionary austerity becomes. He and Oscar Jorda
show that if you give less weight to episodes where the austerity/no
austerity policy choice was more predictable (i.e. more endogenous) and more
weight to episodes where the policy choice was less predictable (i.e. more
exogenous) then you find that austerity was extremely contractionary in
slumps. This does not mean that fiscal consolidation is never necessary, but
that the time for consolidation is when times are good, not when times are
bad. It would be nice if Austerians could display a similar recognition that
context matters.

Comments

Kevin O'Rourke at the Irish Economy Blog has a succinct explanation
of the findings:

The boom, not the slump, is the right time for austerity, by Kevin O’Rourke:
Alan Taylor has a
piece on Vox today that is a nice contribution to the debate on the
output effects of austerity. That debate has largely been about the
endogeneity of fiscal policy: the more you take this into account, the more
contractionary austerity becomes. He and Oscar Jorda
show that if you give less weight to episodes where the austerity/no
austerity policy choice was more predictable (i.e. more endogenous) and more
weight to episodes where the policy choice was less predictable (i.e. more
exogenous) then you find that austerity was extremely contractionary in
slumps. This does not mean that fiscal consolidation is never necessary, but
that the time for consolidation is when times are good, not when times are
bad. It would be nice if Austerians could display a similar recognition that
context matters.